​By David Drake
Catalyst Fundraising
Several news outlets reported recently that a class action lawsuit has been filed against PayPal for its handling of donations through its PayPal Giving Fund. Even if your nonprofit doesn’t use PayPal as its giving platform, this can affect your nonprofit.

What is the PayPal Giving Fund?
To be honest, I had never heard of the PayPal Giving Fund until this news broke. It functions a bit like a workplace giving campaign. Donors go onto the PayPal Giving Fund website and enter in either the name of a specific charity, a cause, or a geographic area, and a list of charities that fit that criteria appear. Donors can then make a gift directly to the charity from that list. PayPal proudly states that 100% of the contribution goes to the nonprofit.

So, what’s the problem?
The problem is this – the charities listed on the site were loaded by PayPal without notifying the nonprofit. The gifts are made to a 501(c)3 that PayPay has established, so they are responsible for providing the donor with a receipt. The suit alleges that PayPay does not release the funds to the charities unless they have registered with the site, even though they are listed. So, while your nonprofit is probably listed on PayPal Giving Fund, donations intended for your organization may not be getting to you. Worse, if the funds are not claimed in six months, PayPay “reassigns” them to other nonprofits that are registered! So, donations that should be coming to you are going someplace else, and your donors aren't being thanked and stewarded by you. If your organization isn't registered with the PayPal Giving Fund, it should do so immediately.

But wait, there’s more
Additional damage may be done to nonprofits who use PayPal as their giving platform, and many small nonprofits do because it is inexpensive and easy to set up. However, donors who catch a glimpse of the stories may think that donations made on your organization’s website through PayPay may have somehow been mis-directed. Donations made through the regular PayPay system are not affected by the PayPal Giving Fund issue. 

Pay close attention to your online giving volume, and if it drops, consider posting a message on your donation page that explains the issue. Otherwise, when donors see the PayPal logo, they may head elsewhere. I know it is always a tough call to raise an issue before your donors ask about it, but I think in this case, it is better to be ahead of the curve.

Unfortunately, nonprofits don’t need any more news that discourages people from giving. PayPal set up its Giving Fund with good intentions, but as they say, the devil is in the details.

The 2017 race has begun, and for fundraisers, January should be a time of assessment. No matter when your fiscal year ends, because so many gifts come in during December, it is a great time to see whether you are on pace to meet your goals.
 
So, how did you do? Did you meet your goals for December and for 2016?
 
If you met your goal, congratulations! But, just looking at the total dollars you raised is not enough. It is like going for a checkup that consists only of having your temperature taken. Lots more could be going on that one measure alone doesn’t reveal.
 
Here are some assessments you should consider running on your 2016 results.
 
Donor Retention. According to AFP’s Fundraising Effectiveness Project, the national average donor retention rate is 46 percent. How does your organization stack up? Every fundraiser knows how difficult it is to acquire new donors. The cost of acquiring new donors nearly always exceeds the value of their gifts, so keeping your existing donors is critical to improving your Return on Investment. But, unless you calculate your Donor Retention, how do you know where you stand? It also is important to examine the donor retention rate across your different segments. This way, you can adjust your messaging for groups that are underperforming. You can segment your donor file in many ways – by source, by geography, by age, etc. What segments are your best performers and which ones need work?
 
Giving Trajectory. Believe it or not, you can be winning and losing at the same time. What do I mean by this? Let’s say that you raised more money than last year. Great, right? Well, was that because you had more people giving, people giving more, or both? It is easily possible that you raised more money because you added lots of new donors, but existing donors are decreasing their giving. Or, your existing donors may be giving more, but you are losing donors at an alarming rate. A Giving Trajectory Analysis will tell you what the trends are for your file.
 
Lifetime Value. What is that donor worth to you? Sounds crass, doesn’t it? However, it is important to know what the average length of time a donor stays active and the average amount given over that time. Why is this important? It helps you spend your acquisition dollars more effectively. If your donor lifetime value is only a few dollars, you need to focus on improving donor retention before you spend money on donor acquisition.
 
Top 10. Not the Letterman list, but the characteristics of the top 10 percent of your givers. If you can identify the characteristics of this important group, you are a long way toward finding more donors who have potential.
 
Doing these assessments takes time and that is always one commodity that most fundraisers lack, especially in smaller organizations. If you can’t get this work done in-house, you may want to consider having an outside person do it for you. However you do them, it is important to get them done.
 
Catalyst Fundraising is a consulting firm dedicating to helping nonprofits improve their return on their fundraising investment. Contact us for help in assessing your fundraising results.
 

By David Drake

Lots of people at nonprofit organizations talk about a culture of philanthropy, but what is it, really? I’ve worked in some places that have a great culture of philanthropy and others that have a terrible one. Here are few things in my experience that make a great culture of philanthropy.

It starts at the top. No way about it, there will never be a strong culture of philanthropy unless the board president strongly supports fundraising – in word and deed. A board president who is reluctant to insist that every member give, that board recruitment consider fundraising ability and capacity, and respects the advice of development professionals, will never get very far. The chief development officer mustattend all board meetings and be included in any strategic planning processes that the board conducts.

The Development Director should have a place on every board meeting agenda – in tandem with the Development Committee chair – to provide updates on successes and ask for help when needed.

The board development committee must clearly communicate to all potential board members exactly what the expectations are surrounding fundraising. If the organization has a minimum board “give or get” (which I don’t recommend), that needs to be spelled out. The committee also needs to understand that it is perfectly ok to have people on the board who have lots of money and are generous, even if they are not as involved in the board’s activities as you may like. Ideally, the development director, along with the Executive Director, attend board development meetings and are encouraged to submit names.

The Executive Director understands it is her job too. Any Executive Director who thinks that the job of raising money can be delegated entirely to the Director of Development will not have a positive culture of philanthropy. The Director of Development needs to be involved in the annual budget process. Telling the development director, “Here’s your number for the year, go out and raise it,” is not serious about developing a positive culture of philanthropy. There are two parts of developing an annual budget – what the organization needs and what the community will support. The development director needs to have input in the latter. Executive directors need to be willing to pick up the phone and call donors or meet with them and be enthusiastic about it. Executive directors should expect to spend at least 1/3 of his or her time on fundraising activities. In the best case scenario, the executive director and development director work in close partnership moving prospects along.

There is adequate budget to do the job. I spoke with one fundraiser who said that her (now former) organization would only send mail appeals to 500 people a year. This was for a major cultural institution that had thousands of names in its database. Why only 500 letters? That was all that they budgeted for. It wasn’t based upon results at all. Organizations that expect 10 percent or more growth in fundraising every year while keeping the budget flat aren’t serious about building a culture of philanthropy.

There is a connection between the organization’s need and its fundraising goals. I worked at one organization that raised money for programs that didn’t need it. This ethically questionable practice was driven by the need to “hit” an arbitrary number. What the money was raised for didn’t matter.

The Finance Department gets it. Fundraisers and accountants look at numbers differently. Yes, 2+2 always equals 4, but how fundraising results are counted and reported to donors may need to be different than what the auditors require. As long as the methods are honest and rational, there should be no problem with this. Finance and fundraising also need to work together closely to provide budget information for grants and to provide clear explanations to donors about the organization’s finances. A finance department that doesn’t cooperate with fundraisers can have a series negative impact.

HR Policies are flexible. Fundraising is not a 9 to 5 job. There are weekends, late nights and lots of stress, especially at event time or year-end. Any organization that will dock leave when the development staff come in at 10 a.m. when they were working until 10 the night before does not have a culture of philanthropy. I once worked for an organization that closed between Christmas and New Year’s. This was in the days before email or cell phones, and there was no way that development staff could respond to year-end gift questions or keep up with the heavy volume of gifts that needed to be processed and deposited. I always wondered how many gifts were lost because of that.

Program staff understand why the organization raises money. The organization with the strongest culture of philanthropy I worked at took time at least once a year to give a presentation to the staff about fundraising. Staff were walked through the organization’s budget and saw where fundraising fit in and how the organization would be positively or negatively impacted based upon fundraising results. This explanation went a long way in building cooperation and trust when development staff needed help from the program staff or a special event disrupted program activities.

Development staff share the responsibility. I’ve seen both ends of the spectrum with development staff – some who apologize for raising money and others who throw their weight around when they don’t get their way “because I keep this place afloat.” Neither attitude is helpful. Nor is the attitude that program are not people but a means to an end. For an organization to have a true culture of philanthropy, fundraisers must be respectful of everyone in the organization, regardless of their level, and to take a genuine interest in the organization and its work. If fundraisers are just in it to hit their numbers, they should go sell timeshares.